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McDonald's Takes on Convenience

Company to offer $1 soda.

April 14, 2008, 08:00 pm

CHICAGO -- In an effort to gain some beverage business from convenience stores, McDonald's Corp. is reportedly urging store owners in the Western U.S. to offer $1 soda, Crain's Chicago Business reported.

"Let's take the c-store drink out of their hands and build our transactions," an April 2 memo from McDonald's western division chief, Steve Plotkin, stated.

The memo refers to a 100-day time frame for the promotion, but doesn't specify a launch date or whether McDonald's will discount drinks elsewhere, according to the report.

Through the memo, Plotkin signaled the company's concern about the effects of a slowing economy, the report stated.

"Value is integral to delivering for our customers in this economic environment," the memo stated.

The move isn't without some risks. Competitors could jump on the bandwagon, or franchisees could lose profits when drink prices are cut in half, the report stated.

"Times are tough, and this could be a beverage war," Dennis Lombardi, an Ohio-based restaurant consultant, told Crain's. "This is tapping into an area that historically fast-food chains have not wanted to go."

He added that cheap drink prices could lead more customers to mix and match items from the value menus instead of ordering combo options.

In addition, McDonald's is also going after c-store customers through the sale of packaged beverages, the report stated.

A spokeswoman for 7-Eleven, which has 7,500 stores in North America, told the paper the convenience chain has an edge over McDonald's with time-pressed customers.

"Customers, especially males, want a quick fountain beverage and aren't inclined to wait in line or at the drive-through when they can run into a 7-Eleven store and get what they want quickly," she said.